Small-Cap Value Funds 

Investing in the stock market can be exhilarating and intimidating at the same time. One of many options available today is some small-cap value funds, which have gained much attention as capable delivery vehicles for tremendous returns. This guide comprehensively explains small-cap value funds, their performance dynamics, associated risks, investment strategies, and more. By the end, you will be well-equipped to make informed decisions regarding small-cap value funds. 

What Are Small-Cap Value Funds? 

Small-cap value funds are equity mutual funds or exchange-traded funds (ETFs) focused on the stocks of undervalued small-size companies. The companies concerned trade at low price-book (P/B), low price-earnings ratio (P/E), and price-cash flow ratio (P/CF), making them an excellent investment opportunity for capitalising on future growth and market corrections. 

What Are Small-Cap Value Stocks? 

The market capitalisation of companies associated with smaller-cap stocks would range from USD 300 million to USD 2 billion. Value also means the stock’s price is lower than the calculated intrinsic value derived from other financial metrics, such as earnings, assets, or cash flow. 

Important Characteristics 

  1. Market Capitalisation:

Small-cap companies are largely at the lower ranks. They are mainly in the growth stage and also have room for growth. 

  1. Value Metrics:

“Value” refers to how these companies trade cheaper at their estimated intrinsic values than the market values. 

Valuation metrics involved  

  • Low P/B ratios  
  • P/E ratios  
  • In high dividend yields in some cases 
  1. Growth Potential:

Many small-cap value stocks are in industries or sectors that have growth prospects but are experiencing cyclical headwinds that temporarily make the investment less appealing to investors. However, these stocks provide value to long-term investors. 

  1. Risk and Volatility:

Small-cap value funds are more volatile than large-cap funds because the underlying companies are relatively small and hence easily susceptible to market conditions. 

Understanding Small-Cap Value Funds 

To understand small-cap value funds, it is essential to understand their makeup, the companies they focus on, and how fund managers work. 

Investment Universe 

Small-cap value funds primarily target companies showing these characteristics: 

  • Lower Market Valuations: Stocks trading at a discount relative to their intrinsic value. 
  • Growth Potential: Businesses showing promise in future earnings and market potential. 
  • Financial Resilience: Businesses with sound fundamentals, despite market mispricing. 
  • Undervalued Sectors: Often, these funds invest in sectors experiencing temporary downturns but with a positive long-term outlook. 

Fund Manager Strategies 

Fund managers play a pivotal role in identifying suitable small-cap value stocks. Their strategies often involve: 

  • Thorough Financial Analysis: Examining a company’s health through profitability and growth metrics. 
  • Industry Trends: Identifying sector-specific trends that may drive the stocks. 
  • Valuation Techniques: Using fundamental analysis to find those stocks selling below their true value. 
  • Diversification: Spreading investments across different sectors and industries to mitigate risks. 
  • Active or Passive Management: Some funds are actively managed, while others track a small-cap value index. 

Performance and Risk of Small-Cap Value Funds 

Historical Performance Trends 

Historically, small-cap value funds have shown the possibility of beating other asset classes for long-term returns. Using financial data, it’s clear that small-cap value stocks in the US stock market have offered much more solid returns than large-cap and growth stocks during some periods.  

As examples: 

  • 5-Year Average Return: Approximately 11%–15% every year, depending on which fund and market condition has prevailed. 
  • 1-Year Returns (2023): Some funds have reported more than 30% yields because of market recoveries and undervalued opportunities. 

It is worth noting that although the performance of small-cap value funds in the past has been encouraging, past results alone are not a predictor of future performance. 

Risk Considerations  

Investing in small-cap value funds has natural risks, such as the following: 

  1. Market Volatility: Small-cap stocks are more volatile than large-cap stocks, which means that price swings are increasing.
  2. Economic Sensitivity: These equities are generally more sensitive to macroeconomic factors.
  3. Liquidity Risk: Small firms’ low trading volumes result in lower market liquidity, which increases the prospect of price impact during a purchase or sale.
  4. Company-Specific Risks: Bad management, debt, and operational problems are some of the factors that can seriously affect small-cap companies. Before investing capital, these risks must be compared with investment goals and time horizons.

Investment Strategies in Small-Cap Value Funds 

  1. Long-Term Investment Horizon

Small-cap value stocks may also require some time to see their real market value. An indicative holding period of 5–10 years will also help these companies grow, recover from temporary failure, and get maximum returns. 

  1. Diversification

The diversification in small-cap value funds will act as an important tool of risk management. Diversified funds invest in several sectors and industries to ensure that the failure of the stocks does not have a strong effect on the fund. 

  1. Active Monitoring

Small-cap value funds should periodically be reviewed to ensure proper performance. Investors, too, must be well-equipped with market conditions to identify assets or sectors that may not perform and make strategic adjustments in those areas. 

  1. Dollar-Cost Averaging

The fixed amount invested periodically will reduce the impact of market volatility. The strategy will ensure the purchase of more shares at lower prices and fewer at higher prices, which will average the cost in the long run. 

Examples of Small-Cap Value Funds 

Several well-reputed small-cap value funds exist, especially in developed markets like the United States. Below are some examples of small-cap value funds, with their unique strategies, performance, and benefits to investors. 

  1. Vanguard Small-Cap Value Index Fund (VSIAX)

It is a favourite investment option for those who want to access a diversified portfolio of small-cap value stocks. The fund tracks the CRSP US Small-Cap Value Index, which contains a wide range of undervalued companies across all sectors. 

Key features 

  • Low Expense Ratio: The expense ratio of the Vanguard Small-Cap Value Index Fund is extremely low, at 0.07%. This makes it one of the ideal choices for long-term investors seeking minimal investment costs. 
  • Diversification: The fund invests in hundreds of small-cap stocks, providing broad market exposure while minimising the risks associated with individual stock performance. 
  • Performance: The fund has historically delivered consistent returns aligned with the overall small-cap value segment and outperformed many actively managed alternatives over extended periods. 

This fund appeals to passive investors who care more about low costs and broad exposure to small-cap value stocks. Hence, it can be used as a cornerstone for diversifying portfolios. 

  1. Dimensional U.S. Targeted Value Portfolio (DFFVX)

Dimensional Fund Advisors runs an actively managed fund with a target of small-cap value stocks with high profitability. This follows the use of stringent filters that look for companies that, at attractive valuations, show a solid base. 

Key Features 

  • Active Management: The fund has active management, and the managers can spot specific opportunities and react to any changes in market conditions. 
  • High-quality metrics: The portfolio’s investments are based on strong profitability metrics, which act as a buffer to balance the intrinsic risks within small-cap investing. 
  • Expense Ratio: Although higher than index funds, the expense ratio of around 0.44% is competitive for an actively managed fund. 

This fund is ideal for investors who want a more hands-on approach to small-cap value investing, with a chance of higher returns because of strategic stock selection. 

  1. TIAA-CREF Small-Cap Blend Index Fund (TISBX)

The TIAA-CREF Small-Cap Blend Index Fund tracks the Russell 2000 index and combines the features of small-cap value and growth stocks, thus giving exposure to a mix of the best value and growth stock opportunities in the small-cap universe. 

Key Features 

  • Broad Exposure: This will include undervalued and high-growth stocks within the small-cap market. 
  • Low Expense Ratio: The fund’s expense ratio is 0.06%, making it very cost-effective. Therefore, minimal drag on returns will occur. 
  • Stability and Balance: The blending strategy will reduce volatility as the investor diversified across value and growth stocks. 

This fund suits investors seeking a middle ground between value-focused and growth-oriented small-cap funds. It offers steady growth potential without excessive risk. 

Frequently Asked Questions

Know how much risk you can take given your financial goals and investment time horizon. 

  • Diversify portfolio: Invest in asset classes and funds that lower general risk. 
  • Research Thoroughly: Before investing in that fund, know the prior performance of the fund management strategy and check your expense ratio. 
  • Stay disciplined: Avoid decisions made when short-term market movements come into play. 
  • Seek professional Advice: Seek a financial consultant for individualised investment advice. 

The impact of corporate actions, including mergers and acquisitions, stock splits, and declaration of dividends, is enormous on small-cap value funds. For instance, 

  • Mergers and Acquisitions: A large corporation’s takeover of a small-cap company immediately increases the price and the subsequent gain to the fund. 
  • Dividends: Small-cap value funds of firms with stable dividend payments tend to boost the investment’s net return. 
  • Stock Splits: When companies have a stock split, their value does not alter, but they increase liquidity, attracting many more investors to that firm. 

Investment Focus: 

  • Investment in an investor value fund is in undervalued stocks. Sinvest funds invest in companies that can, which may have a relatively high valuation. 

Risk Profile: 

  • Growth funds have a higher risk profile; instead, value funds may be relatively stable for investment. 

Return Prospect: 

  • The value fund would provide stable returns in the long run. On the other hand, a growth fund will give more significant returns with increased risks. 
  • Diversification: This refers to spreading investments in various companies and sectors. 
  • Regular Monitoring: Monitor fund performance and rebalance according to need. 
  • Set Realistic Goals: Understand that small-cap value funds take time to produce significant returns. 
  • Education: Keep abreast of the market trends and economic conditions affecting small-cap stocks. 
  • Expense Ratio: Lower expense ratios are preferred since they reduce the investment cost. 
  • Performance History: Check the fund’s performance history over 1, 3, and 5 years. 
  • Portfolio Composition: Seek diversification across industries and geographies. 
  • Management Team: Experience and reputation of the fund managers in managing the funds 
  • Liquidity: Trade volume will ensure ease of joining and leaving. 

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    Mooncakes: The Hidden Environmental Cost of Gifting

    Published on Oct 21, 2025 161 

    Every year during the Mid-Autumn Festival, many homes across Asia are filled with colourful mooncake boxes. Some are lavishly designed, embossed with gold foil, and often heavier than the pastries they protect. Crafted to impress and symbolise prosperity, they serve as tokens of appreciation in both corporate and personal exchanges. Yet after the celebration ends, many of these boxes end up discarded, barely used and seldom recycled. This seemingly harmless tradition reflects a broader tension between aesthetic excess and sustainable responsibility. For investors, the discarded mooncake box offers profound Environmental, Social, and Governance (ESG) lessons that extend far beyond the packaging industry. The first lesson lies in the environmental cost of aesthetic indulgence. A typical premium mooncake box is made from layered materials, including coated paper, plastic inserts, metallic embellishments, and magnetic clasps, making it nearly impossible to recycle efficiently. According to Bloomberg, the popularity of mooncakes and their elaborate packaging is driving China’s rising demand for plastics, with polyethylene output nearly doubling since 2018 and packaging equipment production increasing by 32.2% this year. [1] Similar patterns are observed in Singapore, where elaborate packaging has become a competitive differentiator among brands. From an ESG investment standpoint, this issue is best viewed through the lens of resource efficiency and the circular economy. Excessive packaging contributes to higher waste generation and increased Scope 3 emissions, highlighting the importance of responsible consumption and production as outlined in UN Sustainable Development Goal 12. For investors, this underscores the need to assess companies based on measurable sustainability outcomes—such as energy efficiency ratios, waste reduction targets, carbon disclosure scores, and supply chain transparency—rather than appearances alone. The second ESG dimension is the social factor. It emerges when we consider why companies continue producing such elaborate packaging. The answer lies in consumer psychology and societal norms. Many consumers perceive luxury packaging as a proxy for quality or sincerity. In the corporate gifting culture of Asia, presentation often outweighs practicality. This social expectation drives firms to overproduce, even when executives acknowledge the waste involved. For investors, this highlights how social sentiment shapes corporate ESG behaviour. Companies respond to consumer values, and when those values shift, capital flows follow. In particular, evolving preferences toward sustainable alternatives highlight potential transition risks for companies that are gradually adapting their packaging and product offerings. Businesses that align with this growing demand for sustainability are better positioned to maintain market share and support long-term profitability. For example, in recent years, sustainable packaging companies such as DS Smith (UK) and Huhtamäki (Finland) have outperformed traditional peers, benefiting from global consumer preference for biodegradable materials. [2] The discarded mooncake boxes, therefore, are not just environmental waste but also a social signal. It is evidence of a misalignment between consumer behaviour and sustainability awareness. As younger generations grow increasingly sustainability-conscious, demand for minimalist, eco-friendly products will expand. Firms that fail to adapt may face reputational and financial risks. The governance aspect of ESG relates to how companies balance short-term marketing appeal with long-term sustainability goals. Approving costly, non-recyclable packaging might signal weak sustainability oversight or poor board alignment with ESG principles. When companies prioritise optics over impact, it suggests governance complacency. For investors, governance quality is therefore a key indicator of whether ESG initiatives are genuine or merely performative. As global regulators, from the EU’s Corporate Sustainability Reporting Directive (CSRD) to Singapore’s mandatory climate disclosures, tighten standards, weak governance will translate directly into financial penalties and reputational damage. The mooncake box thus symbolises ESG immaturity: decisions made without integrating environmental and social responsibility into corporate frameworks. The broader takeaway for investors is discernment. This involves distinguishing intrinsic value from cosmetic appeal. Just as consumers are drawn to the shimmering box rather than the mooncake’s quality, investors can be seduced by ESG branding that lacks operational depth. According to MSCI’s 2024 ESG Trends report, over 60% of global funds labelled sustainable had no measurable decarbonization strategy. [3] Sustainable investing must be data-driven, focusing on tangible performance indicators such as emissions intensity, renewable energy use, and board diversity. Ultimately, the discarded mooncake box is symbolic of humanity’s sustainability paradox, illustrating our instinct to value appearance over essence. Yet, in a hopeful turn of events, several confectionery and packaging firms are now adopting biodegradable materials, reusable tins, or digital gifting models that reduce waste entirely. Brands like Maxim’s and Mei-Xin have begun introducing recyclable paper packaging, while newer entrants market minimalist boxes that position environmental care as part of their brand identity. These shifts demonstrate how sustainability, when aligned with brand equity, can yield both financial and reputational dividends. Investors should recognise that ESG investing is not philanthropy. It is, in fact, risk-adjusted capitalism. Companies that anticipate and mitigate environmental and social risks consistently outperform those that react too late. The mooncake box, then, becomes both a cautionary symbol and a call to action: to demand substance over spectacle, long-term stewardship over short-term appeal, and responsibility over reputation. As the glitter fades and the boxes pile up, the true investors are those who see lessons in the waste by understanding that sustainability begins not in grand gestures but in small, deliberate choices. Keen to explore how sustainable investing can make a lasting impact? Learn more at phillipfunds.com/sustainable-investing. Contributor: Kenneth Chan Wealth Manager Phillip Securities Pte Ltd (A member of PhillipCapital) https://bit.ly/kennethchanwb Appendix: [1] https://www.bloomberg.com/opinion/articles/2025-10-08/luxury-mooncakes-won-t-go-away-nor-will-plastic-waste [2] https://time.com/collection/worlds-most-sustainable-companies-2024/ [3] Sustainability and Climate Trends to Watch Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Why Idle Cash Attracts Scammers & How to Beat Them

    Published on Oct 15, 2025 585 

    You may come across news about scams on your social media feeds. Recent headlines such as “Scam victims in Singapore lost $456m in the first half of 2025” raise alarm. From investment fraud to phishing emails and fake trading apps, online scams are on the rise. Many of these schemes prey on people with idle cash, basically – money sitting in their bank account without any active management. Common examples of scams include fake “high return” investment platforms promising 10-20% per month, social media scams where strangers solicit “joint investments”, and insurance premiums scams, where callers pose as insurers, claiming that you have “outstanding premiums” to pay or risk a policy lapse. When “Safe” Investments Turn Out to Be Scams Someone close to me once fell for a scheme that seemed harmless at first. The scammers convinced him that he could “book hotel rooms” online as an investment. The pitch sounded safe: invest some money, wait for tourists to check in, and then receive both your capital and profit when they check out. It sounded good, but of course, there were no hotels, no tourists and no returns. Fortunately, he didn’t lose everything, but the stress and the near-miss experience were painful reminders that scams don’t just target the greedy, but also prey on the trusting, the busy and anyone with idle funds seeking an opportunity. Recently, a client called to check if she had any outstanding premiums. She had received a call demanding immediate payment or risk lapsing her policy. Fortunately, she was aware of such scams and contacted me before making any payments. However, this type of scheme can be convincing, as most Singaporeans own some form of insurance, making the scam appear genuine. Here are some important reminders: 1. Legitimate insurers will never ask for your PIN or bank login details. 2. Premium payments should always be made through official company channels. 3. The best safeguard is to schedule annual reviews with your trusted financial advisor, so you’re always clear on which policies you have and when your premiums are due. Even if you do not fall for scams, idle funds carry another silent risk — underutilisation. Cash sitting in a bank account and earning little to no returns is especially vulnerable in today’s high-inflation environment. You might think idle money is “safe”, but in reality, it’s either exposed to scams or quietly losing purchasing power. This is where SMART Park makes a difference. Once you have opted in to SMART Park - Excess Funds Facility and transfer the money into your POEMS account, the funds will automatically be placed into the money market fund. Your cash then generates daily returns, which you can conveniently view from the POEMS Mobile 3 app. Enjoy full flexibility — your funds in SMART Park stay liquid and can be accessed anytime you need them. Simply submit a withdrawal request, and you should receive the funds within 1 working day. This adds an additional layer of security before you decide how to use your funds. Think of SMART park as a secure parking lot: instead of leaving your “car” in a dark alley (where scams lurk), you're parking it in a well-lit and guarded facility. In short, SMART Park is low risk, liquid and generates better returns. Scams often thrive on two things: greed—chasing unrealistic returns, and inattention—ignoring idle money or losing track of your insurance details. By parking your funds in SMART park and staying connected with your advisors, you address both risks: avoiding the lure of risky schemes while letting your money work for you safely and automatically. In today’s world, protecting your wealth is not just about steering clear of scams; it’s also about ensuring your cash isn’t left idle and unproductive. With SMART Park, you can be confident that your funds are managed and are growing steadily in the background. Often, the most harmless-looking attempts by scammers can cause the biggest damage. The smarter choice is to keep your cash somewhere both secure and productive. Ask your advisor today how SMART Park can make your idle cash work for you! Contributor: Elin Chee Financial Services Manager Phillip Securities Pte Ltd (A member of PhillipCapital) http://bit.ly/TTPelin Appendix: [1] https://www.straitstimes.com/singapore/scam-victims-in-spore-lose-record-1-1-billion-in-2024-highest-number-of-cases-ever-reported Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Night Owls and Early Birds: A Guide to Extended Hours Trading

    Published on Oct 14, 2025 88 

    Introduction Extended-hours trading refers to buying and selling securities outside regular trading hours. Unlike standard trading sessions, these transactions are executed primarily through Electronic Communication Networks (ECNs), which facilitate trades when traditional exchanges are closed. Key Takeaways Two Sessions: Extended-hours trading in the US consists of two sessions — pre-market (4:00 am to 9:30 am ET) and post-market (4:00 pm to 8:00 pm ET). Market Indicator: Activity during these sessions often provides early signals for the regular trading day, though participation is typically lower, resulting in reduced liquidity. News Impact: Extended-hours trading is especially useful for reacting to breaking news, earnings releases, and merger announcements, many of which occur outside standard market hours. Risks & Volatility: Prices can swing more sharply during these sessions due to reduced trading volume and wider spreads. As a result, extended-hours activity may not always reflect the true momentum of the broader market. What is Extended-Hours Trading? Extended-hours trading is exactly what it sounds like — trading that takes place outside of the US market’s official opening hours. It is divided into two sessions: the pre-market (4:00 am to 9:30 am ET) and the post-market (4:00 pm to 8:00 pm ET). Pre-market activity often provides early clues about how stocks might perform once the market officially opens. While trading volume is generally lower during this period, significant changes in price and volume can hint at potential market direction and investor sentiment. Similarly, the post-market session reflects how investors react to news and earnings announcements released by many highly traded companies after the closing bell. This activity can offer insights into overall market sentiment and may influence expectations for the next trading day. Why Trade in Extended-Hours? 1. Opportunities for Early Reactions to News and Announcements Important news — such as earnings reports, financial results, or merger and acquisition news — is typically made before the market opens or after it closes. Extended-hours trading gives investors the chance to respond immediately, rather than waiting for the opening bell. Key economic data releases, such as jobs reports and inflation figures, also tend to come out around 8:30 am ET, during pre-market hours. In times of heightened volatility, extended sessions are often the first to reflect breaking news, allowing investors to adjust their positions quickly. Likewise, announcements made during post-market hours can trigger sharp price swings and significant gaps from the previous close. For example, Oracle (ORCL.US) surged more than 30% in post-market trading following news of a deal with OpenAI. Yahoo Historical Price on ORCL.US Though not as drastic, these movements after earnings reports or stock exchange filings are quite common. An example is when Coinbase (COIN.US) fell about 6% after its Q2 2025 earnings release. CNBC Reporting on Coinbase (COIN.US) Q2 Results 2. Gauge for breakouts or breakdowns during normal trading hours The price range of a stock during extended-hours trading can provide traders with insight into its support and resistance levels during regular hours, as well as potential breakouts or breakdowns. Changes in prices and trading volumes during these hours can foreshadow broader market movements throughout the day. 3. Access to longer trading hours Extended-hours trading allows investors to place trades immediately to manage their positions without for the market to open. This offers greater flexibility and convenience, as the trading window is longer. Traders restricted to regular trading hours may have to limit their strategies accordingly. Monitoring extended-hour activity also aids in risk management and informed trade positioning. Engaging in extended-market trading can offer opportunities for a timely entry or exit, giving investors a potential edge when the regular market resumes. Risks in Extended-Market trading 1. Lower Liquidity and Wider Spreads In extended hours trading, there are usually fewer buy and sell orders compared to regular market hours. This lower activity makes it difficult to buy or sell at your desired price. Your order may only be partially filled, or not filled at all. Fewer trades and higher volatility can also cause wider bid-ask spreads and larger price gaps between buyers and sellers. 2. Risk of Higher Volatility Prices can move more sharply during extended hours than during the regular session. This increased volatility means your order might not be fully executed, or it may be completed at a less favourable price. 3. Risk of Unlinked Markets Different extended-hours trading systems may display varying prices for the same security. Because these systems are not always interconnected, you might receive a less competitive price on one platform compared to another. 4. Risk of News Announcements Important company or market news is often released outside regular trading hours. Such announcements can cause sudden and sharp price movements during extended sessions, making it harder to trade at expected prices. What are the differences between extended-market and regular trading? Characteristics Extended Hours Regular Liquidity and volume Low High Bid-ask spread Wide Narrow Susceptible to higher or lower price gaps (refer to chart A above) Yes Generally no Price movements Prices are determined by a smaller group of investors, which may be heavily influenced by market news. (e.g. earnings release) Proper supply and demand dynamics determine price movements, ensuring orderly trading conditions. Market participants Predominantly institutional investors Both institutional and retail investors The table above captures the main differences between extended-market and regular trading sessions. Can I trade in the extended-hours market? How? Yes, you can! US extended-hours market prices on POEMS are available from 4:00 am to 9:30 am ET and 4:00 pm. to 8:00 pm. ET. You may refer to the table below to see the corresponding time in Singapore. Pre-market start time Pre-market end time Regular market start time Regular market end time Post-market start time Post-market end time US Eastern Standard Time (EST) 04:00 09:30 09:30 16:00 16:00 08:00 Singapore time (daylight saving) 16:00 21:30 21:30 04:00 04:00 08:00 Singapore time (non-daylight saving) 17:00 22:30 22:30 05:00 05:00 09:00 Extended-market orders can be placed starting from 4:00 am ET and remain valid until the close of the post-market session at 8:00 pm ET. Quotes for extended-market trading are only available during these hours. Any unfilled orders will automatically be carried forward into the next regular trading session. To begin trading in the extended market, click here. If you have any further questions, please visit our FAQ on US pre-market trading. Visit our website or contact our dedicated Night Desk team at globalnight@phillip.com.sg or (+65) 6531 1225. Start investing smarter with POEMS today — open an account and trade the US markets now! Open an Account Now! Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Should You Invest Your Supplementary Retirement Scheme (SRS) Savings?

    Published on Oct 1, 2025 482 

    Many individuals in Singapore can expect to spend an average of 2025 years in retirement. Over such an extended period, inflation may gradually reduce overall purchasing power. Therefore, it is essential to secure financial stability by ensuring there are sufficient savings to cover essential needs and living expenses during this period. Investing your SRS savings may be crucial for combating inflation and maximising your retirement savings. Aside from the average 0.05% bank interest earned on idle savings, SRS savings can be invested in various instruments, providing more opportunities to grow at a rate that may keep up with or even outpace inflation. What is the Supplementary Retirement Scheme (SRS)? The Supplementary Retirement Scheme (SRS) is a voluntary savings scheme introduced by the Singapore government to help individuals build a larger pool of retirement savings earlier in life. It provides an additional layer of savings to complement CPF, offering tax advantages and investment growth opportunities. Singapore Citizens/Permanent Residents can contribute up to a yearly maximum of S$15,300, and foreigners can contribute up to S$35,700. SRS Annual Contribution Limits Singaporeans/Permanent Residents S$15,300 Foreigners S$35,700 Individuals can make tax-free withdrawals from their SRS accounts of up to S$40,000 annually over a period of 10 years. The statutory retirement age is fixed when the first SRS contribution is made. Any subsequent change in the statutory retirement age will not affect an individual’s ability to withdraw. This ensures that the SRS withdrawal age remains consistent even if the official retirement age changes later. Why Should You Invest Your Supplementary Retirement Scheme (SRS) Savings? While SRS offers a baseline interest rate of 0.05%, there are a variety of investment options available through the scheme to make your money work harder for you. Through the SRS framework, your accumulated savings can be diversified across multiple asset classes and markets – including Unit Trusts, Stocks, ETFs, and many more. Additionally, gains from your SRS investments are not subject to tax while they remain in your account. By investing early, your SRS savings benefit from compounding, providing an additional stream of income to complement your CPF savings. In summary, SRS offers three benefits: tax relief on contributions, potential investment returns, and tax concessions on withdrawals, where only 50% of the withdrawn amount is subject to tax. How to Open an SRS Account? You can open an SRS account with any of the three local participating banks either online/in-person: DBS Group Holdings Ltd Overseas-Chinese Banking Corporation (OCBC) Ltd United Overseas Bank (UOB) Ltd Before opening an account, you will be required to confirm that you do not have an existing SRS account with another SRS operator before proceeding. *For foreigners: Please complete the Declaration Form for SRS (For Foreigners) to declare your foreigner status* Required Documents Document required for opening an SRS account: NRIC/FIN or Passport Who is eligible to open an SRS account? Singapore Citizens, Singapore Permanent Residents (SPRs) and foreigners who: Are at least 18 years of age; Are not an undischarged bankrupt; and Do not have a mental disorder and can manage themselves and their affairs; Do not already have an SRS account (including one that has been suspended) with the same or another operator; and Do not have a pending application with another SRS operator to open an SRS account; and Have not previously had an SRS account with the same or another SRS operator where all the funds had been withdrawn i) On medical grounds; or ii) On or after reaching the statutory retirement age prevailing at the time of your first contribution. SRS Investment Options: What Can You Invest in? SRS savings can be allocated across various investment vehicles – ranging from low-risk fixed deposits to higher risk options like stocks. This flexible approach enables individuals to align their investments with their goals and risk tolerance. Investment Options available for SRS Savings Unit Trusts REITs Stocks Singapore Government Securities ETFs Single Premium Insurance Products Fixed Deposits Low Volatility/Sustainable Options for SRS Investing with Phillip Capital Management (PCM) Investors looking for investment strategies designed to provide consistent returns and high liquidity may find the ‘Phillip Money Market Fund’ suitable as a low-risk option. Investors with higher risk tolerance who are interested in companies engaging in sustainable practices can look into funds such as the ‘Sustainable Reserve Fund’. 1. Phillip Money Market Fund The Phillip Money Market Fund aims to provide a high level of liquidity while delivering returns comparable to those of Singapore dollar savings deposits. The Sub-Fund invests primarily in short-term, high-quality money market instruments and debt securities. Through strategic diversification, it enables the fund to optimise yield without compromising flexibility. https://www.poems.com.sg/fund-finder/phillip-money-market-fund-534010/ 2. Sustainable Reserve Fund The Sustainable Reserve Fund is a diversified, short duration bond fund that aims to achieve income yield enhancement over the 6-month Singapore Overnight Rate Average (SORA). Guided by its proprietary ESG-integrated investment framework, the fund employs an inclusionary, sustainability-focused selection process—investing at least 70% of assets in issuers committed to taking appropriate actions that contribute to a green economy. The Sub-fund primarily invests all its assets in global fixed-income instruments (including short-term interest-bearing debt instruments and bonds), money market instruments and bank deposits (including fixed deposits). Structured as a short-duration bond fund, it achieves robust diversification across issuers, with no specific sectoral emphasis. Find out more here: https://www.poems.com.sg/fund-finder/sustainable-reserve-fund-a-sgd-dis-sgxz21949797-534202/ https://www.poems.com.sg/fund-finder/sustainable-reserve-fund-a-sgd-acc-sgxz39183199-534201/ Limited Time Reward Enhance the growth potential of your SRS savings with Phillip Capital Management! From now till 31st December 2025, Receive S$10 worth of PMMF BONUS UNITS for every S$10,000 invested in eligible funds using SRS – Plus, enjoy additional rewards when subscribing with a Regular Savings Plan (RSP) during the promotion period.Find out more: https://tinyurl.com/mt4nb2k5*T&Cs apply Conclusion The Supplementary Retirement Scheme (SRS) is more than just a tax-deferral tool. Investing your SRS savings can serve as a powerful strategy to counter inflation in the long run. Ultimately, it plays a strategic role, amplifying the growth potential of your retirement nest egg while preserving its value. FAQs about Supplementary Retirement Scheme How do I start investing using my SRS Savings on POEMS? Open an SRS account with any of the three participating banks stated above. Link your SRS Account to your trading account via POEMS 2.0 or POEMS Mobile 3 App: Log in to POEMS 2.0 > My Settings > My Account > Bank A/C information > Select ‘SRS’ tab > Fill up the required information Log in to POEMS Mobile 3 App > ‘Me’ Tab > Bank A/C Information > Select the pen icon on the top right-hand corner > Select ‘SRS’ and fill up the required information Filter investment type to ‘SRSIA’ to search for funds. I’m new to SRS investing. What’s a good way to get started? If you’re investing for the first time, start with beginner-friendly options: Unit Trusts – offering diversified portfolios to mitigate investment risks. SMART Portfolio - a discretionary investment service that matches a best-fit portfolio based on your online risk analysis. What happens to my SRS savings when I reach the retirement withdrawal age? You may make penalty-free withdrawals spread over 10 years (starting from the date of your first penalty-free withdrawal) on or after the statutory retirement age that was prevailing at the time of your first SRS contribution. 50% of the withdrawal sum from your SRS account is subject to tax and will be taxed at the rate applicable to you. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Patience Pays Off: Mastering the Wheel Options Strategy

    Published on Sep 30, 2025 179 

    Introduction In today’s dynamic economic landscape, investors would miss out on profit-taking windows as a result of heightened volatility. In reality, it may also take a while for investors to see a return on their investment in a safer stock, while faster-paced alternatives like buying short-term options may be too risky. That’s where the Wheel Strategy comes in — a patient, structured approach that helps you generate consistent income while taking advantage of market movements, without the stress of chasing quick wins. What is the Wheel Strategy? The Wheel Strategy combines two option strategies: the cash-secured put and the covered call, and works in a cycle as follows: You sell a cash-secured put to collect a premium while waiting to buy a stock at your chosen price, potentially. If the cash-secured put is assigned, you now own the stock at that price. From there, you switch to selling a covered call, earning an additional premium while holding the shares. If the shares get called away, you return to step one and repeat the cycle. This approach is often described as “slow but steady.” Instead of chasing big, risky wins, you’re consistently generating income from option premiums. As such, it is particularly suited for investors who want a steady cash flow, lower stress compared to large speculative trades, and a disciplined, rules-based strategy that doesn’t require constant monitoring. Think of it as a patient way to let the market work for you over time, while still giving yourself opportunities to accumulate shares or take profits depending on how the stock moves. If you’d like a deeper understanding of cash-secured puts and covered calls, be sure to check out our earlier market journals, where we break down these strategies in detail. Why Patience Matters Each cycle of the wheel takes a certain amount of time to complete. Essentially, you are earning “rent” from your cash or shares. By continuously collecting option premiums, you create a steady income stream while tailoring your strategy to prevailing market conditions. This approach can provide consistent gains over the long run. The strategy works best when applied to stable, highly liquid, and fundamentally strong stocks, where the risks of sudden price shocks are lower and premium collection is more reliable. Risks to Consider ● Underlying Stock Risk Downside risk arises from a decline in the underlying stock price. This means the investor bears the same downside exposure as directly holding the stock — in the worst-case scenario, the stock price could fall to zero, resulting in a total loss of the investment. However, this risk can be mitigated by investing in stable, fundamentally strong companies. Blue-chip stocks, in particular, are less prone to sharp price declines, thereby helping to reduce downside exposure. ● Opportunity Cost The Wheel Strategy also carries opportunity cost. If the stock rises significantly above the strike price, your profit is capped. With cash-secured puts and covered calls, the maximum gain is limited to the option premium received and, in the case of covered calls, the stock appreciation up to the strike price. This differs from simply buying and holding the stock, where potential gains are theoretically unlimited if the stock continues to rally. While option strategies provide steady income and some downside cushioning, they do so at the expense of unlimited long-term upside. Who This Strategy Is For As the name suggests, the Wheel Strategy requires patience. It often involves eventually owning the underlying stock — either at expiration or earlier if the option buyer exercises their rights. This strategy is especially suited for investors who are comfortable holding stock long term, since assignment is always a possibility. The Wheel is designed to provide consistent cash flow and can even lower the average cost of entry into a stock. In times of macroeconomic uncertainty, when market direction can be harder to predict, the Wheel Strategy offers a disciplined approach: it allows investors to stay engaged in the market, collect income, and potentially acquire quality stocks at attractive prices, while managing risk more systematically. Conclusion The Wheel Strategy serves as a reminder that patience can pay off in investing. Instead of chasing fast-moving trades or hoping for sudden windfalls, you’re steadily collecting premiums, small hits that add up over time. It’s not about timing the market perfectly or predicting every move. It’s about having the discipline to follow a structured process, staying comfortable with owning quality stocks, and letting time work in your favour. Ready to start? Explore our beginner-friendly options platform today, or if you would like to dive deeper into other strategies, check out our detailed guide on Cash-Secured Puts. For more information on trading the US markets through POEMS, visit our website or contact our Night Desk representatives at 6531 1225 (available from 2 PM onwards). Don’t wait—register your account today and take the first step towards accessing these exciting markets! Open an Account Now! Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Factor-Based (Smart-Beta) ETFs: How They Work, Selection Criteria, and Practical Uses for Singapore Investors

    Published on Sep 30, 2025 98 

    Summary Factor-based (often called smart-beta) ETFs use transparent, rule-based indexes to tilt exposure toward specific investment attributes (factors) such as value, quality, momentum, dividend yield, growth, or low volatility. They offer a middle ground between purely passive market-cap indexing and fully active management, adapting ETF mechanisms with a systematic, repeatable focus or priority aimed at improving risk-adjusted returns or reducing volatility. Examples include dividend or quality ETFs in Singapore (e.g., high-yield Singapore ETFs such as Phillip Sing Income ETF (OVQ)) and US factor ETFs like iShares MSCI USA Momentum Factor ETF (MTUM) and VanEck MSCI International Value ETF (VLUE). 1. What is a Factor-Based ETF? Simple Definition A factor ETF tracks an index that explicitly selects and weights stocks according to one or more measurable characteristics or “factors” — e.g., companies with high dividend yields, superior profitability, or recent price momentum. Why “Smart-Beta”? The term smart-beta highlights that these ETFs use “smarter” index construction rules than simple market-cap weighting. They are still index-based (rule-driven), providing transparency and low operational subjectivity, but differ from a plain traditional index by seeking outcomes such as higher income, lower volatility, or exposure to value/growth dynamics. 2. Common Factors and What They Capture Core Factors for Consideration Value: Stocks that appear cheap on metrics like price-to-earnings or price-to-book. o Favours cyclicals, financials at times. Growth: Companies with strong sales/earnings growth expectations. o Favours tech and disruptive firms. Momentum: Stocks that have performed well recently (trend-following). o Can capture strong performers but may reverse in mean-reverting markets. Quality: Firms with stable earnings, high returns on equity, low leverage. o Typically less volatile in downturns. Dividend / Income: Companies with higher or growing dividends. oAttractive for yield seekers and income investors. Low Volatility: Stocks with lower historical price swings. oUseful for defensive allocations. Size: Small-cap tilt. Factor Behaviour It is important to understand how each factor behaves differently across cycles. For example, value often outperforms after a market trough or rotation, momentum performs well in trending markets, and low-volatility may protect capital in downturns. Investors can use factor diversification by combining different factor exposures to smooth returns. 3. How Factor Indexes Are Constructed & Reviewed Selection & Scoring Universe: Start with a market universe (e.g., S&P 500 or Singapore stocks). Scoring: Each stock receives a score based on factor metrics (e.g., yield, ROE, price momentum). Ranking & Cut-Off: Stocks are ranked; the top N (quantity) or top X% (percentage) are included. Weighting: Stocks can be equally weighted, factor-weighted, or follow a modified market-cap rule. Rebalancing Schedule Most factor indexes rebalance on a scheduled basis (quarterly, semi-annually). This maintains the factor tilt but creates potentially higher turnover compared to passive traditional indexes. Higher turnover can increase transaction costs and taxable events (for taxable accounts), leading to a higher expense ratio due to the operating cost of rebalancing. Thus, investors should check rebalancing frequency and expected impact of ETF expense ratios. Example: Income / Quality Index (Singapore) Method: Rank by dividend yield, financial health and business quality; pick top 30 names. Result: A high-income, quality-tilted basket (e.g., Phillip SING Income ETF methodology). 4. Differences Between Factor Selection vs Traditional Index Selection Traditional Market-Cap Index Selection: All eligible stocks included; weight proportional to market capitalization. Outcome: Emphasises largest companies; automatically increases weight as a stock’s price rises (momentum bias). Factor Index Selection: Stocks selected by factor scores (value, dividend, quality). Outcome: Overweights companies with desired traits even if they are not the biggest by market cap; can intentionally underweight or exclude certain sectors. Practical Consequence Factor indices purposely deviate from market-cap benchmarks to pursue specific performance characteristics — this is why their returns can diverge significantly from plain indices. 5. Factor ETFs: Practical Uses and Examples Uses in a Portfolio Return enhancement: E.g., value or momentum factor for potential excess returns. Risk management: Low-volatility or quality factors to reduce drawdowns. Income solutions: Dividend factor ETFs for yield-focused allocations. Diversification: Combining factors with market-cap exposure to potentially smooth returns across cycles. Examples (US & Singapore) Momentum (US): : MTUM — momentum tilt. Value (US): VLUE — value tilt. Dividend (US):: VYM or SDY — dividend-focused indices. Singapore Income / Quality (SGX): Phillip SING Income ETF (OVQ) — high income + quality selection. Thematic overlaps: Growth/AI exposures can be achieved via growth factor ETFs or through thematic ETFs that incorporate factor rules. Source: S&P Dow Jones Indices. As at 30 September 2024. Based on S&P 500 Index and relevant factor indices. Past performance is not indicative of future returns. You cannot invest directly in an index. Index performance does not take into account any ETF fees and costs. 6. What to Look for When Selecting Factor ETFs Key Selection Criteria Clear methodology: Read the index rulebook—how are factors measured and weights assigned? Rebalancing frequency and turnover: Higher turnover means higher trading costs and potential tax implications. Historical factor behaviour: Understand cycle sensitivity (e.g., value vs. growth). Fees: Factor ETFs generally cost more than plain market-cap ETFs but less than fully active funds. Compare expected net-of-fee outcomes. Liquidity & AUM: Sufficient assets under management and trading volume reduce bid/ask spreads and tracking uncertainty. Overlap: Check overlap with existing holdings—factor ETFs can unintentionally concentrate similar stocks across multiple funds. 7. Key Takeaways — Factor ETFs Key Selection Criteria Smart-beta blends rules and targeting: Factor ETFs offer targeted tilts while preserving index transparency and systematic discipline. Know the factor: Different factors perform in different environments; combine factors to diversify factor risk. Mind the mechanics: Rebalancing frequency, turnover, and fees materially affect outcomes—read the methodology.. Use factors strategically:Consider factors as building blocks — e.g., combine a core market-cap ETF with a dividend factor ETF and a quality ETF for balanced exposure. Call to Action Consider adding selected factor ETFs to your watchlist and reviewing how they perform to observe if any can play a role in your investment portfolio. Some examples mentioned in this article are: OVQ (SGX — Singapore income/quality) MTUM (US — momentum) Mind the mechanics Rebalancing frequency, turnover, and fees materially affect outcomes—read the methodology.. VLUE (US — value) VYM / SDY (US — dividend focus) As always, align your ETF picks with your preferred investment goals and strategy. Review choices based on total portfolio exposure to avoid unintentionally becoming overexposed to one or a few counters.. Stay tuned for our next feature, where we explore different aspects of ETF categories in greater detail. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore. CFD Disclaimer This promotion is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks. The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated. The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange. You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low. Clients are advised to understand the nature and risks involved in margin trading. You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualified financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement. You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at https://www.poems.com.sg/) before trading in this product.

    What is an Active ETF?

    Published on Sep 26, 2025 191 

    An Active ETF is an exchange-traded fund with a portfolio that is actively managed by investment professionals. Unlike passive ETFs that simply mirror a stock index, investment in active ETFs involve ongoing buy and sell decisions aimed at achieving a specific goal — whether that is outperformance, generating income, or capturing exposure to a particular theme. How Active ETFs differ from Passive ETFs Objective: Passive ETFs aim to replicate an index (e.g., S&P 500). Active ETFs aim to outperform a benchmark or achieve a specific outcome (e.g. high income or targeted growth). Management: Passive ETFs follow rules automatically while active ETFs rely on human judgement, quant models, or a combination of both. Costs: Active ETFs usually charge higher management fees because of the research, trading, and portfolio management involved. Transparency & Holdings: Passive ETFs typically disclose holdings frequently and are predictable. Some active ETFs may disclose less often to protect proprietary strategies, although many still provide daily updates. 2. Why Demand for Active ETFs Is Growing Access to differentiated strategies Active ETFs open the door for retail investors to tap into strategies once reserved for mutual funds or large institutions. These can include thematic bets on artificial intelligence, enhanced income strategies, or opportunities in niche and tightly regulated markets. ETF wrapper benefits With active ETFs, investors enjoy the best of both worlds: the expertise of an active manager combined with the advantages of the ETF structure. This includes intraday liquidity (they trade like a stock), potential tax efficiencies, and lower minimum investment amounts compared with some mutual funds. Innovation and regulation Recent regulatory developments and improvements in ETF infrastructure have empowered asset managers to launch a wider variety of active strategies in ETF form. This growing menu of options caters to investors’ appetite for more tailored outcomes, driving innovation across the industry. 3. Common Active ETF Strategies (with Examples) Fund managers launch active ETFs using different strategies to appeal to investors with specific goals or preferences. Some of the most common approaches include: A. Thematic & Growth Active ETFs Goal: Capture long-term growth by investing in themes such as Artificial Intelligence (AI), robotics, or disruptive technologies. Example (US): ARK Innovation (BATS: ARKK) — actively selects disruptive growth companies Example (SG): Lion-Nomura Japan Active ETF (SGX: JJJ) — actively selects Japanese stocks with AI-assisted processes B. Income & Option-Enhanced ETFs Goal: Deliver steady income by combining dividends with strategies like covered calls or option overlays. Example (US): JPMorgan Equity Premium Income ETF - (NYSEARCA: JEPI) uses options to enhance yield C. Sector / Regional Active ETFs Goal: Leverage managers’ best ideas in a specific region or sector (e.g. Japan, ASEAN, healthcare) Example (SG): Active Japan ETF JJJ (SGX: JJJ) - An Active ETF where the manager selects 50–100 stocks tailored to current market opportunities 4. Benefits and Risks: What Investors Should Consider Benefits Potential to beat benchmarks: Active managers can exploit inefficiencies, allocate tactically, and lean into high-conviction opportunities Customisation: Investors can express specific views — such as AI adoption or Japan’s recovery — through a single ETF Operational convenience: Active ETFs trade on exchanges like stocks, offer intraday liquidity, and usually have lower minimums than traditional mutual funds Risks & Drawbacks Manager risk: Returns depend heavily on the manager’s skill and process. Past performance is no guarantee of future success Higher fees: Active strategies are generally more expensive, and over time, higher costs can eat into returns Transparency tradeoffs: Some active ETFs limit disclosure to protect proprietary models, which can reduce clarity for investors Underperformance odds: Statistically, many active funds fail to outperform comparable passive benchmarks over time 5. How Singapore Investors Might Use Active ETFs Portfolio Roles Satellite allocation: Use active ETFs as satellites around a core passive portfolio (e.g., 5–15% tactical exposure to AI or income) Access niche markets: Gain exposure to overseas or tightly regulated markets via locally listed active ETFs without complex account setups Income overlay: Replace or complement fixed income with option-enhanced active ETFs for higher distributed yield Tips for ETF selection Understand the manager’s process and look for a track record in comparable mandates Check fund fees, turnover, and tax considerations Limit allocation to active ETFs to a level consistent with your conviction and risk tolerance (e.g., 5–20% of portfolio) Review holdings / performance regularly and watch for changes in strategy or personnel 6. Key Takeaways — Active ETFs Active ETFs blend professional management with ETF convenience: intraday trading, tax efficiency, and low operational friction. They can deliver differentiated outcomes — alpha, income, or niche themes — but they demand confidence in the manager and come with higher costs. They are best used as satellite positions, complementing a low-cost passive core. Due diligence is essential: read the prospectus, examine the manager’s process, and evaluate costs and track record. Conclusion Active ETFs are reshaping the investment landscape by combining the expertise of active management with the convenience of the ETF structure. They provide opportunities for outperformance, targeted exposure, and innovative income strategies, but they also come with higher costs and the risk of underperformance. For Singapore investors, active ETFs can serve as useful satellite allocations alongside a low-cost passive core, offering access to niche markets, thematic opportunities, or enhanced income. Success, however, hinges on careful manager selection, disciplined allocation, and regular review. As the ETF market continues to evolve, active ETFs are likely to play a growing role in portfolios — not as replacements for passive funds, but as complementary tools to help investors navigate a more complex investment environment. Stay tuned for our next feature, where we explore factor-based ETFs and how they fit into a modern portfolio. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore. CFD Disclaimer This promotion is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks. The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated. The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange. You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low. Clients are advised to understand the nature and risks involved in margin trading. You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualified financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement. You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at https://www.poems.com.sg/) before trading in this product.

    100% Spenders in Singapore: How to Break Free from Living Paycheck to Paycheck

    Published on Sep 17, 2025 316 

    In 2024, 78.3 per cent of companies in Singapore granted wage increases as compared to 65.3 per cent in 2023, according to the Ministry of Manpower’s Report on Wage Practices 2024 1. Despite this growth in earnings, there are still people who end up with no savings every month, specifically 29%, according to a survey done by Sun Life Singapore 2. These are what I call “100% spenders”; every dollar that comes in goes straight out, leaving no savings, let alone investments. On the surface, they may look financially comfortable, but in reality, they are only one emergency away from financial stress. When asked about their lack of savings, familiar replies surface: “Life is expensive in Singapore” or “I’ll save when I earn more.” But the real reason is not just the cost of living; it is also how easy spending has become, combined with a culture that encourages greater consumption as incomes rise. The Ease of Spending Take PayNow, for example. It has become second nature to users to scan a QR code and pay within seconds. A recent study found that 68% of Gen Z in Singapore prefer PayNow as their main mode of payment 3. This convenience is good for efficiency, but it also makes spending too easy. When spending cash, you physically see the notes leaving your wallet; a more conscious action which reminds you of your accumulative expenses over time. With PayNow and contactless credit cards, no physical cash leaves your hands, making it easy to lose track of how much you are actually spending. The same applies to installment plans. Platforms like Atome have become extremely popular, especially among younger consumers. Research shows that 77% of Gen Z in Singapore have used Buy Now, Pay Later (BNPL) services, compared with fewer than half of millennials and only 13% of boomers. 4 Atome alone has over 1.3 million registered users, mostly aged between 21 and 45. 5 It is not uncommon to see young clients juggling four or five instalments at once. Each one is small, perhaps a few hundred dollars for clothes or gadgets, but together they consume a large portion of monthly cash flow. Debt becomes normal before savings have a chance to take root. Lifestyle and Culture Technology is only part of the story; the bigger driver is lifestyle inflation and social pressure. As income rises, so do expectations. What was once a luxury — dining out, travel, or premium subscriptions — quickly becomes a necessity. Social media amplifies this, making conspicuous consumption part of everyday life, fueling consumers’ urge to “keep up”. The reality is that most adult Singaporeans understand the basics of savings, having been taught the mechanics of compulsory savings under the CPF scheme. The issue is not financial literacy but the gap between knowledge and action. It is less about what people know and more about taking responsibility for putting that knowledge into practice. Building Systems That Work Discipline and will power rarely sustain long-term financial change. What works far better is creating a system that makes saving automatic, much like CPF does. Create a personal CPF-like savings or investment account. As soon as your salary is credited, arrange for a fixed portion, usually 15 to 25 per cent, to be automatically deposited into this separate account. Treat it as untouchable. Over time, it will grow into an emergency fund, long-term savings, or investment capital. Reframe instalments. If you are comfortable committing S$100 a month to fashion or gadgets, why not redirect that same amount into a savings plan or a regular investment? When used wisely, instalments for regular savings can build assets, not debts. Manage lifestyle inflation. Rather than upgrading your lifestyle every time income increases, tie those upgrades to net-worth milestones. This helps to ensure lifestyle growth does not outpace wealth growth. The Results With systems in place, change often happens naturally. People who once struggled to save may find their balances growing steadily. Those who claimed “I just can’t save” realise they can, because the system does it for them. This is not about cutting out joy or living with harsh restrictions; it is about structuring finances so that both spending and saving are intentional. By automating positive habits, the cycle of being a “100% spender” can finally be broken. Final Thoughts In Singapore, spending has never been easier. With modern technology, every temptation is just a tap away. But while technology and culture encourage us to consume, only responsibility and structure can create long-term security. The key is to build systems that make saving and investing a habit, not a choice. That is how “100% spenders” transform into wealth builders — and achieve financial freedom. Contributor: Joshua Lim Wealth Manager Phillip Securities Pte Ltd (A member of PhillipCapital) https://bit.ly/TTPjoshualim Appendix: [1] https://www.ntuc.org.sg/uportal/news/Nominal-and-real-wages-grew-in-2024-but-are-expected-to-taper-in-2025/ [2] https://finance.yahoo.com/news/large-part-singapore-unprepared-retirement-123057707.html [3] https://www.xero.com/us/media-releases/digital-payment-trends-singapore-gen-z-leading-shift/?utm_source=chatgpt.com [4] https://www.channelnewsasia.com/today/big-read/buy-now-pay-later-debt-credit-4846131?utm_source=chatgpt.com [5] https://www.magzter.com/stories/newspaper/The-Straits-Times/YOUTH-IN-SINGAPORE-BUYING-INTO-BUY-NOW-PAY-LATER-SERVICES-REPORT?srsltid=AfmBOor-Ell17DenCu69OwzKn5QiL0V8nczkM5cCFGoKuiUwhSLZ58tY&utm_source=chatgpt.com Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

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